Floor Covering Weekly July 21, 2014 : Page 1

Vol. 63 No. 14 A Hearst Business Publication July 21, 2014 $75 Key findings Upturn in construction equals upturn in flooring F LOOR C OVERING W EEKLY The Industry’s Business News & Information Resource 14 STATISTICAL REPORT ‘13 Gains made: Strongest since ‘04 Chart 1 The U.S. floor coverings market surged in percent in 2013. The increase in commercial 2013 as the housing market finally began sales benefited from the 5.2 percent increase to experience a significant recovery. Dollar in private nonresidential building construc-floor coverings manufacturer sales (ship-tion spending, which was partially offset ments minus exports plus imports) are esti-by the 9.4 percent drop in public building mated to have increased construction spending. by 7.1 percent in 2013 Hard surface flooring to approximately $20.1 continued to make addi-billion. Quantity sales tional inroads in 2013, could have climbed by News................................... 3 reported Catalina. Hard 5.5 percent to 18.7 billion 2013 Industry Statistics ...... 4 surface flooring is esti-square feet. This is the marketWise ......................... 5 mated to account for 49.3 strongest industry growth Imports/Exports .................. 7 percent of total dollar since 2004, reported Cata-sales and 43.4 percent Wood................................... 8 lina Research. of total square foot sales The acceleration in Tile & Stone ...................... 15 in 2013. This is up from industry growth over the Resilient............................ 20 47.9 percent and 42.5 past year was primarily Laminate........................... 24 percent, respectively, in due to the sharp increase 2012. Hard surface floor-in new and existing home Carpet............................... 28 ing could have captured sales as consumers took The Last Word.................... 34 more than 50 percent of advantage of historically total industry dollar sales low interest rates. Builder flooring spending in the fourth quarter of 2013. In 2013, hard led the way with an estimated 19 percent surface flooring sales are estimated to have increase as new residential square footage increased by 10.2 percent in dollars and construction rose by some 20 percent. At 7.5 percent in square feet. For soft surface the same time, a 9.4 percent increase in flooring, the figures were up 4.2 percent existing home sales contributed to an esti-and 3.9 percent, respectively. mated 7 percent gain in residential replace-Hard surface sales growth received a ment spending. Even non-movers began to boost from its higher dependence on the increase flooring spending along with rising builder market. This is especially true in home prices, increasing personal income the growing ceramic tile, wood flooring gains and a rising stock market. and resilient flooring sectors. Homeowners U.S. floor coverings sales growth would are also increasingly turning to hard surface have been even sharper if not for the slug-flooring when undertaking flooring replace-gishness in commercial market sales. Com-ment jobs. Consumer tastes are changing mercial market floor covering spending as hard surface flooring manufacturers is estimated to have increased by only 4.6 Continued on page 4 2013 U.S. Floor Covering Sales: $20.08 billion (in wholesale dollars) On the inside 1.3% 4.6% 5.9% Cork, rubber, other plastics & linoleum (Other Resilient) $264 million 6.9% from 2012 Laminate Stone $922 million 1.5% from 2012 $1.18 billion 6.9% from 2012 12.1% Vinyl Sheet & Floor Tile $2.43 billion 10.9% from 2012 12.2% Hardwood $2.45 billion 12% from 2012 13.2% Ceramic Floor & Wall Tile $2.65 billion 13.1% from 2012 50.7% Carpet & Area Rugs $10.17 billion 4.2% from 2012 Periodical UP 7.1% For breaking news updated each business day, visit us online at www.fcw1.com Source: Catalina Research from 2012

STATISTICAL REPORT ‘13

Gains made: Strongest since ‘04

The U.S. floor coverings market surged in 2013 as the housing market finally began to experience a significant recovery. Dollar floor coverings manufacturer sales (shipments minus exports plus imports) are estimated to have increased by 7.1 percent in 2013 to approximately $20.1 billion. Quantity sales could have climbed by 5.5 percent to 18.7 billion square feet. This is the strongest industry growth since 2004, reported Catalina Research.

The acceleration in industry growth over the past year was primarily due to the sharp increase in new and existing home sales as consumers took advantage of historically low interest rates. Builder flooring spending led the way with an estimated 19 percent increase as new residential square footage construction rose by some 20 percent. At the same time, a 9.4 percent increase in existing home sales contributed to an estimated 7 percent gain in residential replacement spending. Even non-movers began to increase flooring spending along with rising home prices, increasing personal income gains and a rising stock market.

U.S. floor coverings sales growth would have been even sharper if not for the sluggishness in commercial market sales. Commercial market floor covering spending is estimated to have increased by only 4.6 percent in 2013. The increase in commercial sales benefited from the 5.2 percent increase in private nonresidential building construction spending, which was partially offset by the 9.4 percent drop in public building construction spending.

Hard surface flooring continued to make additional inroads in 2013, reported Catalina. Hard surface flooring is estimated to account for 49.3 percent of total dollar sales and 43.4 percent of total square foot sales in 2013. This is up from 47.9 percent and 42.5 percent, respectively, in 2012. Hard surface flooring could have captured more than 50 percent of total industry dollar sales in the fourth quarter of 2013. In 2013, hard surface flooring sales are estimated to have increased by 10.2 percent in dollars and 7.5 percent in square feet. For soft surface flooring, the figures were up 4.2 percent and 3.9 percent, respectively.

Consumers are increasingly turning to the value retailers — home centers and value hard surface flooring chains — as they take on an increasing number of do-it-yourself flooring replacement projects. To meet consumers’ pricing expectations, these retailers are increasing their sourcing of competitively- priced foreign-made flooring. In 2013, the dollar value of U.S. floor coverings imports increased by 13.1 percent. As a result, imports’ share of total dollar sales rose to 33.4 percent, up from 31.6 percent in 2012. On a square foot basis, imports’ share is 37.5 percent and 35.4 percent, respectively. Import penetration rates are above these rates in the relatively strong growing ceramic tile, resilient flooring and wood flooring product lines. The leading sources of foreign-made flooring were located in China, India, Canada, Mexico and Turkey.